Here\’s a recap of our live coverage of U.S. stock market action Tuesday. You can read a compact rundown of the stock market in Market Snapshot. For questions or comments, please email lmandaro@marketwatch.com.

Colin Cieszynski, senior analyst at CMC Markets, is writing this morning about a stop in the selling.

“It appears that traders have paused for now to assess the technical damage from yesterday’s selloff before the big announcements to come later in the week including US payroll reports Wednesday and Friday and BoE and ECB meetings on Thursday,” he writes in emailed comments.

An experimental drug developed by Furiex Pharmaceuticals Inc met the main goal of a pair of large Phase III clinical trials by significantly alleviating diarrhea and abdominal pain associated with irritable bowel syndrome, the company said on Tuesday.

Jeffrey Kleintop, chief market strategist at LPL Financial writes that January was unusual not because of the 3.5% drop, but because of high volumes, which surged to levels not seen since May 2010.

Importantly, the stock market and trading volume have not been on friendly terms in recent years. In fact, over the past five years’ low-volume days (when stock trading volume is below its 50-day moving average) stocks have generally gone up. Conversely, when volume is above average, stocks have generally been flat to down.

What caused such a surge in trading in January? It is hard to say exactly—weather-impacted economic data points, emerging market turmoil, or the Federal Reserve (Fed) tapering its bond purchases . But given recent history, the good news is that the spikes in trading volume have not been sustained for long, and, as the volume turns back down, markets have historically recouped losses.

Kleintop says that the weakness in emerging markets is due to improving economic growth around the world and not a sign that it is weakening. So, in this opinion, the January dip is not a start of a bear market and global recession, but a pullback after strong gains late last year.

Stocks are up, Treasurys are down, and the dollar is rebounding against the yen. In recent trade, the dollar
/quotes/zigman/4868099/realtime/sampledUSDJPY rose to ¥101.56 from ¥100.92 late Monday. The greenback could make a run on ¥102 if stocks continue to recover, says Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management. Read more here.

One of the critical factors worth watching is potential sentiment extremes in both the USDJPY and the SPX500, which tracks the fair value of the S&P 500 futures contract.

A look at FXCM Execution Desk data shows that retail FX traders are their most net-long the Dollar against the Yen since fairly significant turning points. And though we typically go against the crowd—we often sell when most are buying and vice versa—positions are often their most one-sided at key turns.

J.C. Penney jcp
/quotes/zigman/237947/delayed/quotes/nls/jcpJCP shares reversed earlier gains and are now tanking, down 12% at last check. It looks like at a closer inspection, the 2% increase in sales was not “good enough” for the investors.

This earnings season has been somewhat overshadowed by overseas news – either emerging markets currencies, a slowdown China or deflation in Europe. But individual stocks are doing well in the wake of earnings, according to Bespoke Investment Group.

Among the stocks to watch, Twtiter Inc reports its first quarterly reports as a publicly-traded company on Wednesday after the market close.

But Twitter will also report at a time when analysts have grown more cautious, arguing that the stock has become overvalued, especially after a steady runup since the San Francisco company’s initial public offering in November, writes Benjamin Pimentel.

Stocks are bouncing back after Monday’s selloff. But is the downturn really over? Portfolio manager Eugene Peroni at Advisors Asset Management thinks so. He says the pullback left the market “very oversold” and “somewhat undervalued.”

Late last year, when the Fed announced that it would start reducing its monthly bond purchases program, markets rallied, because finally there was clarity: the economy is doing well and can grow sustainably from here on without the stimulus.

However, a few disappointing reports, such as dismal December jobs data or the ISM manufacturing data injected a healthy dose of skepticism about the pace of economic growth.

Assured Guaranty Ltd. /quotes/zigman/345584/delayed/quotes/nls/agoAGO, another bond insurer, fell after the downgrade, but recovered that drop to close out the session up 0.3%. Many strategists say the bond insurers could weather a Puerto Rico default.

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